Because your point is that the wage gap between the US and Chinese household would close significantly - yet it does not.
Even with those multipliers, the wage gap between your median Thai and Malaysian household and your median Chinese household is significant, let alone with an American household.
The wage gap cannot be solved until there is a serious expansion in China's social safety net if China wishes to continue to use a production driven growth model.
This is what Japan, Germany, the US before Reagan, South Korea, and much of Eastern Europe did when they reached similar developmental precipices to China today.
China can see a significant jump in living standards similar to that which Poland saw over the past 15-20 years if the social safety net is expanded.
China has been one of the most significant economic growth stories in modern history, but the policies used to grow from 1980-2019 are differnet from those that China needs from 2020-2060
China is now in the same developmental band as Thailand, Malaysia, Mexico, Brazil, etc. And if China does not wish to get stuck in the middle income trap, holistic growth across all income strata is needed - not the current k-shaped economy that has developed.
And this is a fairly mainstream position in Chinese economic academia as well, but policymakers are stuck between a rock and a hard place.
That's just another strain of the doomsday economics that has been applied to China at least since 2005. Yet, the Chinese economy and its government have proven to be able to overcome all these supposed huge obstacles that would stop the Chinese growth at any moment... So I urge you to rethink your theories based on reality of what the Chinese people are capable of doing.
Thai workers are not paid in the global reserve currency, so that is irrelevant. The wage gap will shrink because USD will come down relative to CNY. I make no argument that Chinese wages will increase in CNY, nor that the gap will close all the way to zero.
My point is a reserve currency doesn't help the median Chinese in any shape or form, nor does the USD being a reserve currency help the median American.
There are benefits to being a reserve currency at the macro-scale, but they are not felt by the vast majority of households, and any attempts at making the CNY a competitive reserve currency would require dramatically reducing currency controls along with increasing the independence of the PBOC from political leadership, and leave the lower tier of Chinese workers open to job loss and outsourcing [0][1][2][3] as low-to-medium complexity industries remain the primary employment generator in Chinese manufacturing.
This is the exact same thing that happened to Thai, Malaysian, and Mexican manufacturing workers during the 2000s when they hit plateaus similar to China today.
Finally, the US's dominant position is the cause of the USD as a reserve currency, not the other way around [4]. Having a reserve currency is orthogonal to having great power status, as can be seen with the rise of China.
A rising tide lifts all ships - the China story will stagnate if a serious effort at helping the bottom half of Chinese does not develop.
None of what I said detracts from China's success in eradicating extreme poverty.
That said, the majority of Chinese households are still significantly less well off than their peers in other upper middle income countries as stats have shown multiple times.
I don't see why anyone would be so virulently opposed to moving some industrial subsidy spend to expanding healthcare, revamping the current insurance system, providing better quality schools to reduce the cost burden lower tier Chinese households have when spending on education, increasing rural retirement pensions, reforming Chinese income taxes to be less regressive, etc.
Raising household disposable incomes by $2000 a year would help increase GDP growth from 4% to 5% (back of the napkin math) - and that too in a sustainable manner. And this is something that is fairly doable by expanding social services and welfare accessibility. This would also solve much of the overproduction problem that has lead to trade wars globally.
> I don't see why anyone would be so virulently opposed to moving some industrial subsidy spend to expanding healthcare...
This is because many media outlets, whether intentionally or unintentionally, promote the 'China collapse theory,' making it difficult to draw reliable conclusions from curated information.
Take the FT article you cited earlier as an example. As someone living in China with parents who have chronic illnesses, let me describe what healthcare is actually like here:
My father and grandfather both have diabetes. They use NovoRapid insulin at about 40 RMB(6 USD) per pen, requiring 1-2 pens monthly (totaling 100 RMB, 14 USD). Domestic Chinese brands cost roughly half that price.
My mother and I have hyperlipidemia. Lipitor costs about 70 RMB(10 USD) monthly, while domestic alternatives cost around 10 RMB (2 USD).
China's healthcare system features centralized procurement policies where the government negotiates directly with pharmaceutical companies. To have your products included in the insurance formulary and reach more patients, manufacturers must reduce prices.
While this system has some issues (which we could discuss later), nearly all medications—including imported ones—are significantly cheaper in China than in the US.
Two years ago, my grandfather spent his final two weeks in ICU at a cost of 120,000 RMB (16700 USD). Insurance covered 100,000 RMB (14000 USD), leaving us with 20,000 RMB (2700 USD) out-of-pocket.
Regarding insurance coverage:
Rural and urban insurance have different reimbursement rates, but generally cover over 50%.
My parents' retirement income is about 4,000 RMB (560 USD) monthly—relatively high for urban workers. In tier-3/4 cities, most retirees receive over 1,000 RMB
(140 USD)monthly.
Now examining your cited article: Those two farmers never participated in any insurance programs. Having never contributed to:
- Pension funds (hence receiving only the minimum 150 RMB, 20USD monthly—standards vary by city, e.g., ~1,400 RMB,200USD in Shanghai)
- Medical insurance (400 RMB lowest level, 55USD annually, fixed.), making them ineligible for reimbursements. Rural insurance even allows retroactive payments-coverage begins three months after payment, regardless of preexisting conditions.
While such cases exist, they're exceptionally rare. In my entire life, I've only known two families who didn't enroll in insurance—both were wealthy enough to purchase private coverage.
